Lenihan pledges to fight for 'better bailout deal'

ECB president Jean-Claude Trichet talking to Greek Finance Minister George Papaconstantinou at the start of a meeting of
eurozone finance ministers at the European Union Council in Brussels yesterday. Photo: Reuters

ECB president Jean-Claude Trichet talking to Greek Finance Minister George Papaconstantinou at the start of a meeting of
eurozone finance ministers at the European Union Council in Brussels yesterday. Photo: Reuters

FINANCE Minister Brian Lenihan said he is committed to getting Ireland a "better deal" under the terms of the EU-IMF bailout.

Several opposition politicians and analysts have criticised the rate Ireland is being charged to draw down the eurozone's €17.7bn portion of the €85bn rescue package.

It will cost the Government an average of 6.05pc a year -- or just over €1bn -- to access the Luxembourg-based European Financial Stability Facility's cash, which is guaranteed by the 17 countries in the single currency zone.

The rate includes a margin of just under 3pc, agreed by EU leaders last May to deter overspenders from tapping the cash.

"I'm glad to say we're beginning discussions this evening on how those interest rates can be improved," Mr Lenihan told reporters last night.

However, he cautioned that any changes to the bailout programme would take time and careful negotiation with European partners.

Declarations

"My intention is to ensure that Ireland gets a better deal and this is the only way it can be done. It can't be done by unilateral declarations from Dublin; it requires constant, unremitting work here in Brussels to do that," he added.

Belgian Finance Minister Didier Reynders said that any rate changes would have to be negotiated with Greece in mind.

"We need to apply the same rules for all the member states, so we will compare the situation in Ireland and in Greece," he said.

Greece managed to piggyback on the Irish rescue package last November, securing an extension on the maturity of its EU loans from three to seven years.

Mr Lenihan failed to specify what kind of rate change he was looking for, saying that progress would be "slow and incremental".

The IMF charges Ireland an average of 5.7pc on its €22.5bn loan, as does the European Commission on its equivalent share.

The commission's rate includes a margin of 2.925pc.

The IMF's rate will drop by 0.15pc once technical changes to the fund's rules are brought into Irish law -- which Mr Lenihan is to table in the next fortnight -- saving the Government about €34m a year in interest payments.

The changes were agreed in 2008 and are not related to the Irish bailout. Mr Lenihan was in Brussels for general talks on bolstering the bloc's €440bn rescue fund, which some doubt could cover the cost of future rescues.

He is putting Ireland's case forward now that there is an appetite for renegotiating the fund's mandate.